Ford to retire $5 billion in high-interest debt, issue green bonds By Reuters – Investing.com

ReutersStock Markets47 minutes ago (Dec 07, 2021 02:56PM ET)

Ford to retire $5 billion in high-interest debt, issue green bonds © Reuters.

(This Nov. 4 story, corrects ninth paragraph to say that customers would be required to buy electric or hybrid vehicles)

By Paul Lienert

(Reuters) – Ford Motor (NYSE:) Co said it plans to retire up to $5 billion in high-interest debt and tap into the fast-growing market for “green” bonds to help it finance new electric vehicles and expand credit to customers with lower scores.

Ultimately, the automaker aims to regain an investment grade rating for itself and Ford Credit, its captive financing arm, which in turn would lower the cost of future borrowing.

In a media briefing, Treasurer Dave Webb said the company is making a cash tender for “covid bonds” at 8% to 9.5% interest that it issued in April 2020, at the start of the global pandemic.

Ford expects initially to offer a $1 billion green bond at 3.5% to 4% interest, to replace some of the high-coupon bonds and to supplement the zero-interest convertible debt it issued earlier this year.

Part of the money will help fund the automaker’s ambitious plan to convert a significant portion of its global production from fossil-fueled combustion engine vehicles to battery-powered electric vehicles.

The company has said it plans to spend at least $30 billion through 2025 to design, engineer and manufacture a broad range of EVs in North America, China and Europe.

Ford is a leading seller of full-size pickup trucks and SUVs — hugely profitable combustion engine vehicles that are still popular with U.S. customers.

A “sustainable financing framework” announced Thursday will provide Ford with access to new sources of capital, including investors supporting environmental, social and governance (ESG) initiatives.

New green bonds would enable Ford Credit to extend financing to customers with lower credit scores, but would require them to buy electric or hybrid vehicles.

Thursday’s announcement coincides with the United Nations Climate Change Conference (COP26) in Glasgow, Scotland and the fifth anniversary of the Paris Climate Agreement.

Related Articles

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

tp